Hammer drills are power tools that can often operate in three modes of operation. The hammer drill will have a tool bit that can be operated in a hammering mode, a rotary mode and a combined hammer and rotary mode. The hammer drill will typically comprises an electric motor and a transmission mechanism by which the rotary output of the electric motor rotationally drives the tool bit and/or repetitively strikes the tool bit to perform the hammer function. Such a transmission mechanism can be mounted within a transmission housing which is in turn mounted within an external housing of the hammer drill. The use of a transmission housing allows the transmission mechanism to be assembled within the transmission housing prior to its insertion into the external housing as a single sub-assembly. The transmission housing may also be moveably mounted within the external housing so that the hammer drill can be vibrationally damped.